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Money Laundering and Forfeiture In This Issue September 2013 Overview of Asset Forfeiture and Money Laundering Program. 1 Volume 61 By Jaikumar Ramaswamy Number 5 Money Laundering and Asset Forfeiture: Taking the Profit Out of United States Crime. 4 Department of Justice By Douglas A. Leff Executive Office for United States Attorneys Washington, DC Making Forfeiture Part of Your Criminal Case. .12 20530 By Stefan D. Cassella H. Marshall Jarrett Director Prosecuting Financial Institutions and Title 31 Offenses. 19 Contributors' opinions and statements should not be considered an By M. Kendall Day endorsement by EOUSA for any policy, program, or service. Understanding and Detecting the Black Market Peso Exchange. 29 The United States Attorneys' Bulletin is published pursuant to By Evan Weitz and Claiborne (Clay) W. Porter 28 CFR § 0.22(b). The United States Attorneys' Bulletin International Forfeiture Cooperation. 36 is published bimonthly by the By Jack de Kluiver Executive Office for United States Attorneys, Office of Legal Education, 1620 Pendleton Street, Restraining and Forfeiting Assets for Crime Victims. 45 Columbia, South Carolina 29201. By Alice W. Dery, John Andre, and Jennifer Bickford Managing Editor Jim Donovan Interplay Between the Forfeiture and Bankruptcy Proceedings. 54 Legal Assistant By Alice W. Dery Carmel Matin Internet Address The Structure and Operations of the Department of Justice Assets www.usdoj.gov/usao/ reading_room/foiamanuals. Forfeiture Fund. 67 html By Jeffrey G. Snyder Send article submissions and address changes to AFMLS Training and Publications Resource Highlights. 73 Managing Editor, United States Attorneys' Bulletin, By Craig Newell National Advocacy Center, Office of Legal Education, 1620 Pendleton Street, Columbia, SC 29201. Overview of Asset Forfeiture and Money Laundering Program Jaikumar Ramaswamy Chief Asset Forfeiture and Money Laundering Section The Department of Justice’s (the Department) Asset Forfeiture Program will celebrate its 30th anniversary in 2014. Much has happened in the nearly 30 years since Congress first passed the Comprehensive Crime Control Act of 1984. What began as an effort to address a growing national and international drug trafficking problem in the 1980s has become a powerful tool to address white collar crime, international organized crime, drug trafficking, cybercrime, terrorism, human trafficking, child exploitation, and so much more. There has been a similar transformation in the nature of the Department’s efforts to combat the threat of illicit financing through criminal prosecution. Historically, the Department has attacked illicit finance through the prosecution of individuals and financial institutions for money laundering and associated offenses under 18 U.S.C. §§ 1956, 1957, and 1960. The criminal money laundering convictions of Bancomer and Banco Serfin in Operation Casablanca and the successful prosecution of and forfeiture action against Bank of Credit and Commerce International for racketeering were landmark cases whose effects on the integrity of the financial system still resonate today. More recent cases against digital currency purveyors such as e-Gold and Liberty Reserve represent the Department’s efforts to vigorously enforce federal money laundering laws in the face of new and emerging technologies. One notable additional development has been the renewed attention paid to criminal enforcement of the Bank Secrecy Act (BSA), the statutory and regulatory framework that requires financial institutions to detect and prevent money laundering. The BSA, codified in Title 31, has undergone several revisions, most recently through amendments introduced by the Patriot Act, and it places affirmative obligations on financial institutions to implement anti-money laundering policies that prevent the flow of illicit funds through those institutions. Financial institutions are also required to report large cash transactions, as well as any suspicious transactions—information critical for law enforcement to prosecute criminal actors and forfeit criminal proceeds. Notably, although principally a regulatory framework, Title 31 provides criminal as well as civil penalties for “willful” violations of the BSA. In the last decade, federal prosecutors have collected forfeitures exceeding $1.69 billion in connection with BSA violations by both large and small financial institutions. This issue of the United States Attorneys’ Bulletin is intended to demystify asset forfeiture and money laundering law and practice. It is my hope that by providing an overview of the available enforcement tools and an understanding of how they can be effectively used to punish criminal offenders, protect the integrity of the U.S. financial system, and provide some relief to the victims of crime, federal prosecutors will see the value of using the robust techniques described by the various contributors to this issue. In his introductory essay, Money Laundering and Asset Forfeiture: Taking the Profit Out of Crime, Douglas A. Leff, Assistant Special Agent-in-Charge of the Complex Financial Crimes Branch of the FBI’s New York Field Office, explores the means employed by criminals to launder illicit profits and the tools available to investigators to identify, seize, and ultimately forfeit criminal proceeds. The article presents a cogent explanation of why charging money laundering offenses and forfeiting assets is an SEPTEMBER 2013 United States Attorneys’ Bulletin 1 indispensable tool for attacking the financial infrastructure used by criminal organizations and other criminal offenders to launder their illicit proceeds. As the body of law associated with asset forfeiture grows more complex, federal prosecutors are often intimidated by its intricacies and consequently refrain from using this powerful law enforcement tool. Based on his decades of experience bringing asset forfeiture cases, Assistant U.S. Attorney (AUSA) Stefan D. Cassella sets forth asset forfeiture processes and procedures in a manner understandable to all federal prosecutors. His article, Making Forfeiture Part of Your Criminal Case, simplifies asset forfeiture procedure and explains the importance of including asset forfeiture in every appropriate case. The article also discusses some challenges that arise in asset forfeiture cases, such as how to handle parallel proceedings, which require close coordination between the criminal and asset forfeiture prosecutors. Two articles also explore the changing landscape of enforcement priorities in a manner designed to more effectively combat the threat of illicit finance. In Prosecuting Financial Institutions and Title 31 Offenses, Principal Deputy Chief M. Kendall Day of the Asset Forfeiture and Money Laundering Section (AFMLS), discusses the use of BSA prosecutions to preserve the integrity of the U.S. financial system and harden it against existing and emerging illicit finance threats. The article surveys several recent cases and explores the considerations that factor into a decision to bring a criminal BSA case. Understanding and Detecting the Black Market Peso Exchange by AUSA Evan Weitz and AFMLS’ Trial Attorney Clay Porter describes the history of Black Market Peso Exchanges (BMPE) and their structure. The article focuses on how the BMPE system works and identifies red flags that can alert investigators and prosecutors to BMPE related activity in financial transactions. A greater understanding of these criminal schemes and how to prosecute them is vitally important as law enforcement seeks to disrupt the illicit flow of criminal proceeds by transnational criminal organizations, including the drug cartels. No discussion of the growth and expansion of asset forfeiture and money laundering would be complete without highlighting recent developments in international forfeiture and money laundering cooperation. In light of the increasingly transnational nature of crime, it is not uncommon for transnational criminal organizations and individual criminals to secret abroad the proceeds of crimes perpetrated in the United States. In his article International Forfeiture Cooperation, AFMLS’ Assistant Deputy Chief Jack de Kluiver discusses the processes, available tools, and complicating factors that arise in connection with identifying, restraining, and forfeiting assets located abroad. This article also features recent developments in the international sharing of forfeited assets, the expansion of international forfeiture and money laundering agreements and treaties, and the increasing relevance of asset forfeiture and money laundering on the global stage through organizations such as the Financial Action Task Force, Camden Assets Recovery Interagency Network, the G8, and other international bodies. One of the most important developments in the Asset Forfeiture Program over the past two decades has been the use of forfeited assets to compensate victims of crime for their direct pecuniary losses. Three AFMLS attorneys—Deputy Chief Alice Dery, Senior Counsel John Andre, and Legal Counsel Jennifer Bickford—describe in Restraining and Forfeiting Assets for Crime Victims the statutory and regulatory framework established in the late 1990s that gave birth to this increasingly important aspect of the Asset Forfeiture Program. The Program has transferred over $3 billion to victims of crime since its inception. The article explains that the pre-conviction restraint and seizure of assets represents the most powerful and effective way to ensure that ill-gotten gains are preserved for
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